lsatlsat wrote:There HAS to be a problem with this Contracts MC question:
4. (Question ID#2708)
In a written contract, a designer agreed to deliver to a buyer 25 described fur coats at $1,000 each F.O.B. the designer's place of business. The contract provided that "neither party will assign this contract without the written consent of the other." The designer placed the coats onboard a carrier on January 30 and properly notified the buyer of the shipment. On February 1 the designer said in a signed writing, "I hereby assign to [a friend] all my rights under the [designer-buyer] contract." The designer did not request and did not get the buyer's consent to this transaction. On February 2 the coats, while in transit, were destroyed in a derailment of the carrier's railroad car.
In an action by the friend against the buyer, the friend probably will recover
A. $25,000, the contract price.
B. the difference between the contract price and the market value of the coats.
C. nothing, because the coats had not been delivered.
D. nothing, because the designer-buyer contract forbade an assignment.
Incorrect: Answer choice A is correct. Though the assignment from the designer to the friend was improper, the general rule is that assignments are allowed unless doing so materially increases the duty or right of the obligor or materially reduces the obligor's chances of obtaining performance. Thus, answer choice D is incorrect. While the assignment is a breach of contract, here the question calls for the impact of the destruction of the goods. As an assignee, the friend stands in the same shoes as the signer and can sue for the $25,000 contract price. This result is proper because under the UCC, the FOB ("free on board") shipment contract provision here shifts the risk of loss to the buyer. Answer choice B is incorrect because it contemplates expectancy damages, which are not proper here. Answer C is incorrect because although the coats were not delivered, the risk of loss fell to the buyer, not the seller. [The foregoing NCBE MBE question has been modified to reflect current NCBE stylistic approaches; the NCBE has not reviewed or endorsed this modification.]
Here's what I see:
1) FOB contracts keep the risk of loss with the seller
2) Regardless, the seller breached through assignment! In either case, the seller should bear the risk of loss.
This is how I understood it (after getting the question wrong). The FOB was at "designers place of business" which means that once it leaves the designer's place of business, the buyer bears the risk of loss. I used to think FOB always meant destination but I was wrong.
The assignment was prohibited by the contract. However, the assignment was still valid. Unless the anti-assignment clause also specifically voids any attempted assignment, it will generally be valid. I assume, the other party can sue the assigning party for breach but in this case there would be no point. The buyer still has to pay the contract price and the designer fully performed (except for the assignment breach). The buyer didn't suffer any injury because of the assignment.
Think this is correct.